Business Law Contracts Case Study Memorandum

CASE STUDY SCENARIOSunita Sharma is a high-end architect and interior designer. She owns a company called YYC
Design Co., which primarily offers architectural and interior design services to commercial
customers. Occasionally, she will take on residential work but only by referral.
She has recently taken on Samantha Lindt and Nabil Youssef as residential clients. She did so only
because Samantha Lindt is the CEO of one of her biggest corporate clients, Fire and Ice Properties
Inc (“F&I”), and it is critical to Sunita’s business to keep this commercial client happy. F&I has
an annual interior design budget of $275,000, and historically, the accounting department always
promptly paid Sunita’s bills when she worked them. Sunita anticipates that YYC Design Co. will
be the interior designer and architect of F&I’s newly acquired building. Still, the bidding process
for the project has not commenced.
Nabil is Samantha’s husband, who has been living with Samantha for about a year. Nabil is a
freelance writer and editor specializing in travel and food writing. Nabil is currently writing articles
for World Travel Guide on Mexico, where Nabil and Samantha first met. Nabil and Samantha
hired YYC Design Co. to change their Canmore condo drastically. Samantha is very busy and told
Sunita that Nabil would make all of the necessary decisions regarding the renovation and redesign
of the apartment. He was the creative one in the relationship anyways.
Sunita worked with Nabil to design an upscale, cozy mountain retreat. While Nabil was generally
cost-conscious, he splurged on a custom-made soapstone gas fireplace to be the focal point of the
living room design. The fireplace had to be pre-ordered from Edmonton, and the manufacturer
required pre-payment before delivery. The manufacturer also had a no-return policy since the
product was custom-made. Sunita explained this to Nabil before placing the order.
The fireplace, including delivery, costed $9,547. After Sunita’s 30% markup ($2,864.10), the total
quote for the fireplace was $12,411.10. In addition to the fireplace, Sunita quoted $2,585 for her
design work. She also quoted $8,600 for labour, $3,975 for the additional furniture, accents, and
wallpaper, that would be used in the design, and $765 for miscellaneous materials (i.e. natural gas
installation for the fireplace). The full value of the contract was $28,336.10 before tax.
Both Samantha and Nabil signed the contract (see below). Since the fireplace was not returnable,
the contract provided that payment for the fireplace ($12,411.10. before tax) was due upon
execution of the contract. Trusting she would receive payment, Sunita ordered the fireplace shortly
after the contract was signed. The parties agreed that the interior work would be commenced once
the fireplace arrived. Samantha and Nabil never paid for the fireplace.
The fireplace arrived on October 6, 2022. Sunita could not reach Nabil by telephone the day it
came but left a message telling him that the fireplace had arrived and that he should call her to let
her know when she could start the job. The same day, Sunita also emailed an invoice that indicated
that $14,996.11 plus tax was due and owing (for the fireplace and the design work that had already
been completed). She addressed the invoice to Samantha Lindt and Nabil Youssef at their email
addresses. She included a note requesting that the couple contact her as soon as possible so she
could get started on the job.
After a week with no word from Nabil, Sunita called and left another voicemail message. The
following day Sunita arrived at work to find a return voicemail message from Nabil.
In the voicemail, Nabil apologized for not calling sooner and said that he simply forgot with all
the commotion of his latest trip. He then said that he changed his mind and, instead of the fireplace
and cabin feel, had hired Modern Talking Ltd. to redesign the interior to reflect an edgy and
contemporary look with ceiling-to-floor bookcases, dark colors, and a zen garden inside. He
concluded by saying that he was on his way to the airport and would be out of the country again
for the next month but that he would be willing to pay to ship the fireplace back to themanufacturer.
Sunita is extremely upset. However, she does not want the conflict to adversely affect her
relationship with Samantha and F&I. This is the first time she has faced a similar situation, and
she is unsure how to proceed. She believes she has rights under the contract but must mitigate her
losses, but she does not know what that means.
She has contacted the fireplace manufacturer to see if it would accept a return of the fireplace. The
manufacturer advised that it would not accept a return under the terms of the sale. However, after
inspecting the fireplace on October 10, she noted that it was missing a crucial part, without which
it would not work.
Sunita would prefer to get the contract’s total value but is also willing to forego some of it to ensure
the relationship with Samantha and F&I is unaffected. She is also interested to know her options
regarding the fireplace. The terms and conditions of Custom Fireplaces Ltd. are attached.
YYC Design Co.
(Address)
(Telephone)
CONTRACT
Client: Samantha Lindt and Nabil Youssef
Emails: xxx
Address: xxx
Telephone: xxx
Design (completed): $2,585
Soapstone gas fireplace* $12,411.10
Furniture, accents, wallpaper as per design $3,975
Misc. materials $765
Labour $8,600
Sub-Total $ 28,336.1
GST $ 1,416.81
TOTAL $ 29,752.91
Payment due within 30 days of completion of work
* Qualification:
The fireplace supplier has a no-return policy. Payment due for the fireplace immediately upon
signing of this agreement.
The clients agree to pay the above-noted price (and shall be jointly and severally liable, therefore), subject
to any qualifications set out above.
The parties agree that the interior work will be completed as soon as possible after the fireplace delivery.
If payment is not made as agreed, the client will be subject to a 2% liquidation fee on the entire amount
contained in the transaction.
On behalf of YYC Design Co.
Sunita Sharma
Sunita Sharma
Date: September 15, 2022
On behalf of the Client(s)
Samantha Lindt
Date: September 15, 2022
LindtS
Nabil Youssef
YN
Date: September 15, 2022
CUSTOM FIREPLACES Ltd. (CF) TERMS AND CONDITIONS
Buyer understands and accepts the following terms and conditions of sale:
1. PRODUCT QUALITIES:
a. DIMENSIONS: All material dimensions given for custom tile stone are nominal in size.
b. IMPERFECTIONS: Naturally occurring variations in color, tone, finish, and other
characteristics are not considered imperfections.
2. SPECIFICATIONS: Buyer is solely responsible for the accuracy and completeness of all material
dimensions, quantities and plans/specifications submitted to CF.
3. RETURN POLICY: WITHOUT EXCEPTION, CUSTOM PRODUCTS ARE NOT SUBJECT TO
CANCELLATION OR RETURN.
4. INSPECTION: All products must be inspected by Buyer immediately upon delivery. All claims for
defects, deficiencies, variances or otherwise must be reported to CF in writing within five (5) business
days of the date of delivery. Any failure to report a claim from Buyer in writing within this period and/or
any modification or installation of the product shall constitute a conclusive waiver of all claims related
to the product received.
5. LIMITED WARRANTY: CF warrants its products as follows: Upon receipt of written notice from Buyer
of the existence of any materially defective workmanship in CF’s product within 30 days from the day
of delivery of the product (the “Warranty Period”), CF will repair the defective product or deliver a
replacement product without additional cost to Buyer, or refund any monies previously paid by Buyer
for the defective piece of product, at CF’s option, without further liability or obligation toBuyer. CF’s
liability under this warranty shall be limited to repairing or replacing the products furnished by CF
only, and shall in no event involve repairing or replacing any other materials or work performed by
others. CF makes no other warranty, representation or guarantee, whether express or implied, including
without limitation the implied warranty of merchantability or fitness for any particular purpose, that
extend beyond the scope of the warranty expressly set forth herein. All warranties hereunder
become valid and enforceable only upon Buyer’s full and timely payment of the purchase price and
compliance with all terms and conditions of this agreement.
6.PAYMENT TERMS:100% prepayment is required.
7. LIMITATION OF LIABILITY: IN NO EVENT IS CF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, OR REPRESENTATIVES LIABLE FOR CONSEQUENTIAL, INDIRECT,
INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE DAMAGES, LOST PROFITS OR REVENUES OR
DIMINUTION IN VALUE, ARISING OUT OF OR RELATING TO ANY BREACH OF THIS
AGREEMENT, OR ANY PRODUCT OR SERVICES PROVIDED HEREUNDER REGARDLESS OF:
(A) WHETHER THE DAMAGES WERE FORESEEABLE; (B) WHETHER OR NOT CF WAS
ADVISED OF THE POSSIBILITY OF THE DAMAGES AND (C) THE LEGAL OR EQUITABLE
THEORY (CONTRACT, TORT OR OTHERWISE) ON WHICH THE CLAIM IS BASED, AND
NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL
PURPOSE. CF’S LIABILITY FOR ANY AND ALL LOSSES AND DAMAGES SUSTAINED BY
BUYER ARISING OUT OF THE ORDER SHALL NOT EXCEED THE PURCHASE PRICE OF THE
PRODUCT UPON WHICH LIABILITY IS FOUNDED.
Unless otherwise expressly provided herein, payment to CF is due within the period stated on the
Purchase Order at the offices of CF in Edmonton, Alberta. Past due account balances are subject to
interest/service charges at a rate of 1.5% per month. Any failure of Buyer to make full and timely
payment to CF as required shall constitute a material breach of contract. All disputes arising out of this
agreement shall be resolved in Edmonton, Alberta by binding arbitration. Should CF seek to
enforce any of the terms of this agreement and/or any purchase order against Buyer, CF shall be
entitled to recover from Buyer its reasonable and necessary legal counsel fees, court costs and
interest on the debt.
ACCEPTANCE OF THIS AGREEMENT AUTHORIZES CF TO PROCEED WITH THE PURCHASE OF
MATERIAL, BLOCK EXTRACTION, SHOP DRAWINGS, FABRICATION AND/OR ALL OTHER
RELATED SERVICES. ONCE ACCEPTED BY CF, THIS ORDER IS NOT SUBJECT TO
CANCELLATION OR REDUCTION OF THE CONTRACT PRICE BY BUYER. Please make your
purchase decisions accordingly.
ON THE DATE OF SALE I HAVE READ THE ABOVE WARRANTY AGREEMENT AND
UNDERSTAND AND ACCEPT ITS TERMS AND ACKNOWLEDGE RECEIPT OF A COPY OF THIS
AGREEMENT.
YYC Design Co.
Per: Sunita Sharma
Sunita Sharma
Contracts Case Study
The purpose of this assignment is for you to identify and apply contract law to a hypothetical
situation and review dispute resolution methods
Task: You are helping with legal research. In preparing a memo reviewing the issues in Sunita
Sharma’s case, you recognize numerous issues. So, you will select only three (3) distinct
issues. Please identify and analyze three legal issues in the scenario. Make assumptions and
inferences where you feel they are appropriate and tied to the facts. Your legal analysis will be
included in the opinion letter to the client. While Sunita is an educated, professional client, she
knows very little about the law. She needs you to explain the contract law principles and apply
them to the facts. You will need to provide case law examples to help her understand and
ultimately explain what it means to her. Please choose your language carefully to make it easy
for her to understand the legal concepts and recommendations. I am expecting a memo that is
around 1900 words.
Structure your memo using headings:
•
•
Summary of key facts (approx. 150 words)
o The summary should be 5-6 sentences long
o Answer the main questions of who, when, where, what, how, and why
Issue #1 (approx.450 words)
o Applicable law & facts-explanation of the legal principles & case(s)
▪You must focus on particular facts that relate to the issue
o Opinion/Analysis-application of the legal principles to the facts tied to the specific issue.
• Issue #2 (approx 450 words)
o Applicable law & facts-explanation of the legal principles & case(s)
▪You must focus on particular facts that relate to the issue
Opinion/ Analysis-application of the legal principles to the facts tied to the specific
issue.
Issue #3: (approx 450 words)
O Applicable law & facts-explanation of the legal principles & case(s)
▪You must focus on particular facts that relate to the issue
.
Opinion/ Analysis-application of the legal principles to the facts tied to the specific
issue.
Conclusion (approx. 350 words)
Summarize your analysis in this section and briefly explain one dispute resolution
method that you would recommend to the client with reference to her interests.
Instructions:
•
•
•
•
•
The memo should be around six pages long, approx. 1900 words, not including
footnotes
Type and 1.5 space your submission. Times New Roman, 12 Font. 1” margins.
You must cite using footnotes using the McGill guide.
A bibliography/work cited page is not required.
Recall that you must cite the source when paraphrasing. To avoid plagiarism and uphold
the standards of academic integrity, you must reference every sentence containing
information that is not common knowledge or your original ideas.
Tips:
1. Read the case material (instructions, fact scenario, and contracts) carefully.
Briefly summarize the key facts.
1. There are a lot of unnecessary details in the scenario. Make sure to succinctly recount, in
your own words, the facts that matter from a legal perspective.
2. Identify three relevant legal issues that affect the client.
i.
There are more than three in the scenario, so you should have no problem
ii.
State the relevant facts from the scenario for each issue
iii. Each legal issue has a set of facts. There is some overlap in the facts
3. Explain the law you have learned that applies to each issue.
i. For each issue, explain the general principles, and provide at least one case that illustrates how
the principle applies.
d. In the conclusion section, summarize your opinion on three issues in clear language that she
can understand and outline one option the client can use to resolve the dispute(s).
2. Possible issues:
A. Rules of contract interpretation
B. Implied terms
C. Breach of contract
D. Liquidated damages clauses
E. Warranties and Conditions
F. Frustration
G. Mitigation
H. Assessment of damages
3. Pull together your preparatory work, and then write a draft paper.
4. Go over your draft carefully for grammar and spelling
5. Make sure your paper is logical—that your ideas flow in a logical order and you use
headings.
6. Remember who you is your audience. She is not a lawyer and does not know what
you know. If you use a legal term that she might not know, explain it to her.